Originally appeared on the website for Frier Levitt, Attorneys at Law
New York, NY – July 18, 2024 — Frier Levitt, on behalf of New York Cancer & Blood Specialists (“NYCBS”), obtained a federal court judgment confirming an arbitration award that sharply criticizes one of CVS Health’s most secretive and lucrative programs. Judge Buchwald from the United States District Court for the Southern District of New York issued an Order on July 15, 2024, confirming an award from a three-member panel of arbitrators against Caremark, L.L.C., Caremark PCS, L.L.C., SilverScript Insurance Company and Aetna Inc. (collectively “Caremark”). Caremark must pay more than $22,000,000.00 to NYCBS, as a full return of all Direct and Indirect Remuneration (“DIR”) fees, interest, expenses, and attorney’s fees.
Judge Buchwald “unsealed” the confidential arbitration award that Caremark attempted to keep secret from the government, taxpayers, and shareholders. Judge Buchwald’s 48-page Order confirming the award highlighted in the first paragraph that “Caremark began to assess fees on NYCBS if its patients did not adhere to taking oncology drugs prescribed to them, even if the continued use of these highly toxic medications posed health risks to the patients.” (emphasis added). The court quoted the panel’s final award that Caremark “unfairly [tied] both of NYCBS’ hands behind its back and [took] advantage of NYCBS’ (and other providers’) ignorance regarding how performance would be measured.” Relying on Caremark’s contract and American Arbitration Association (AAA) rules, the court found it lawful for the panel to have awarded the full return of all DIR fees paid and to “grant any relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties” (quoting Caremark’s own declaration). The court rejected Caremark’s arguments in their entirety.
The judgment against Caremark stems from an arbitration award that Caremark’s DIR fee program was established in “bad faith” and carried out with “reckless indifference,” as concluded by the panel. The panel found that Caremark “misrepresented the contractual terms” “knowing full well that it would not fulfill its contractual promises.” Furthermore, the panel determined Caremark took advantage of oncology providers’ “ignorance regarding how performance would be measured.” Among other findings, the panel determined Caremark’s performance metrics intentionally ignored that Caremark’s DIR fee program harms Medicare Part D beneficiaries and Caremark systematically obscured the “metrics” it used to judge “patient medication adherence” to specialty drugs. In the end, Caremark’s program was entirely discredited.
View the judge’s order HERE.
Frier Levitt invites clients and interested parties to discuss how this precedent-setting case can be applied to other providers. The legal team at Frier Levitt is readily available for consultation.
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Frier Levitt is a leading law firm with offices in New York and New Jersey. Firm attorneys provide an array of services to healthcare and life sciences clients nationally. Frier Levitt represents providers, wholesalers, manufacturers, plan sponsors, large physician group practices, hospitals, medical spas, hospital medical staffs, ambulatory surgery centers, and laboratories.
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